Vol. 481 No. 2
4 Mr. Noonan asked the Minister for Finance if he will make a statement on remarks in September 1997 by the president of SIPTU that any move to delay tax cuts in this year's budget would mean the possible collapse of the Partnership 2000 agreement; and if he will make a statement on the matter. [15762/97]
The tax commitments set out in the Partnership 2000 agreement will be honoured and on this basis I see no reason the continuation of the agreement should be called into doubt. The Government's proposals on the size and nature of personal and other tax cuts will be set out in the budget on 3 December. I do not propose to reveal the details prior to the budget for good and obvious reasons.
I thank the Minister for his reply.
Does he agree that Exchequer returns for the third quarter indicate that the Exchequer, by way of revenue buoyancy, will collect about £700 million more than was planned in the last budget by the then Government and the then Minister for Finance, Deputy Quinn? In that context, are tax concessions in the forthcoming budget in the order of £500 million not very modest? What is being proposed in effect is that money which the Exchequer and the Department of Finance never intended to collect would be restored to the taxpayer. Will the Minister confirm that in his approach to the budget the minimum tax concession on offer to PAYE workers will be £500 million?
In spite of requests from inside and outside the House, Deputy Noonan will be aware that I have no intention of announcing my budget proposals. The overall tax package will be announced on 3 December, but commitments were given in Partnership 2000 that will be honoured. Commitments given in the joint programme of Fianna Fáil and the Progressive Democrats will also be honoured.
Regarding the revenue buoyancy in 1997, there is a mistaken impression given by commentators that an influx of money one year necessitates tax cuts the following year. All that this year's increased revenue over the budget target will do is lessen, to a small degree, the borrowing requirements for the servicing of debts for 1998 and beyond. The Department of Finance will estimate next year's revenue based on the outturn for this year. That is all that influx does.
I caution all Deputies regarding expectations for 1998. They should look at where we have come from and examine the recent ESRI report published in the lifetime of the last Government, which suggested several reasons for the increase in economic outturn of the last few years. One danger the report mentioned was raising expectations to a considerable degree.
The Minister contributed to those expectations.
I have not done that, even when in Opposition, as Deputy Quinn knows. I will not do it now either.
The Minister's party does.
I have no intention of going back to where we were in the 1970s and 1980s.
I admire the Minister's reticence.
Will other Ministers be equally reticent and will the Tánaiste not announce the budget in advance? The Minister is mixing up different concepts in his reply. It is clear from his Exchequer returns that the buoyancy which has occurred, particularly in PAYE and PRSI, will continue into next year. It is not a once-off influx of money.
The Deputy should put a question to the Minister.
Does the Minister agree that the buoyancy predicted by the Department of Finance will continue into 1998 and this is not a once-off influx of money?
What about cutting 25,000 public service jobs?
This money will be there for tax reductions provided the Minister sticks to his own ceiling of plus 4 per cent in expenditure.
Does the Minister not think it foolish to reaffirm his intention to fulfil the commitments made in the programme for Government of Fianna Fáil and the Progressive Democrats when it is clear that to cut the rates of tax, benefits only the wealthy? He should adopt the strategies of the last Government and expand the bands and increase allowances so that those on moderate and low income benefit. The budget should not be perceived as only giving tax concessions. Taxation should be seen as a lever for economic development. The tax reliefs targeted as I suggest would have a far greater impact on the labour market. They would remove people from the welfare and poverty traps, get them back to work and continue the sustained growth we commenced.
I intend to honour the commitments both of Partnership 2000 and the programme for Government of Fianna Fáil and the Progressive Democrats. Perhaps the Deputy did not have time to read that programme.
There were two versions put out.
An Action Programme for the Millennium states that basic allowances will be increased and will rise by at least the rate of inflation in each budget. The standard rate tax bands will be broadened over five years to ensure that 80 per cent of taxpayers do not pay tax at the higher rate on any part of their income.
One of the main objectives of that programme is honouring the commitments of Partnership 2000 and we will do that.
